The Millionaire Next Door: Buy or Don’t Buy?

This week, The Simple Dollar is conducting a detailed review of the often-lauded personal finance book The Millionaire Next Door. First published in 1996, the book has held a consistently high level of popularity for more than a decade. What valuable insights does this book contain? Let’s find out.

Yesterday, we learned that the typical millionaire approaches life decisions with a steady hand and a plan, thus concluding the book. The next question to address is whether or not the book is worth reading or buying.

The Millionaire Next Door has a substantial amount of good content – more than two hundred pages of non-filler written in a reasonable sized typeface. This is in contrast to many personal finance books which are written in an enormous typeface in order to spread out a small amount of content to the point where it appears to fill a larger book.

The material in the book is cohesive and presents a logical and straightforward worldview, meaning you won’t find contradictory statements throughout. The writing is very readable; I’d even go so far as to call it a “quick read,” though the book wasn’t all that short.

My primary nitpick with the book is the prevalent age bias. There is very little of this book that addresses people under 40 or people who are just getting started with personal finance outside of some general guidelines that can be found in any personal finance book. The meat of this book is written for people who are approaching retirement and are dealing with adult children, a situation that (for me) feels a long way off.

I give the book a “buy” recommendation if you are over the age of forty, if you have substantially greater assets than many people in your age group, or you are interested in long-term financial planning. The book does a great job of outlining what people should be doing in middle age if they want to build substantial wealth (and enable their families to carry on this tradition) for their later years.

On the other hand, I give the book a “not buy” recommendation if you are young and without appreciable assets. At this point in your life, the focus should be on building a solid foundation for your financial life and this book does little to address that topic. Your time and attention is almost assuredly better spent somewhere else.

Next week, The Simple Dollar will begin a five part series on another personal finance book, so come back Monday to see what we have in store!

I disagree that this book is only useful to people aged above 40. It highlights people in that age group because that’s when most people become millionaires. But if you’re already 45 years old and in over your head because you haven’t been living on less than you make and have been enabling your adult children than this book is like a “ha-ha! see what you don’t have/did wrong!”. Where-as if a 20- or 30-something reads it, it can inspire them to get on the right track now, and to not make those mistakes in the future.

Just a comment…does a ‘do not buy’ recommendation mean ‘do not read’? I think that people who are young would benefit from the frugal living examples in this book and I’d recommend they check it out from the library…but I agree it’s probably not one for their bookshelves.

My recollection of the book is the roller coaster ride that the authors take, alternating between serious social science and rah rah boosterism.

It’s like, we’re scientists, and we discovered X, and then they get all excited before suddenly realizing, wait a minute, we’re scientists. Back to the science.

I don’t know if I’ve ever read a book quite like that.

The other benefit is the dispelling the myth of the millionaire. Pop culture tends to think of people like Donald Trump. The book clearly leaves the impression that the millionaire is someone who lives below their means for an extended period of time. That message is beneficial to all ages, but particularly those who are just starting the journey.

The weakness with this book is that is focuses on business owners whose wealth is primarily in the business. That is not a bad thing to have. However, the reason many of these people have the habits they do is that they do not have large incomes as the money is in the business. It is easy to be frugal if you are a farmer with a high net worth due to land but little cash. Same with plumbing contractor, contractor, etc.

I have this book. With all of it’s flaws, I think what it boils down to for me is inspiration. I like to be reminded that it’s not the big expensive houses, cars etc that display wealth, but it just may be the man with a 10 year old car living in an average neighborhood that is. It keeps the temptation level down on the wants AND makes me look at life around me just a little differently.

We’ve lived in an affluent neighborhood and know how easily it can be to be “sucked in” to the pressure and deception. You’ll go broke just trying to keep up.

I’m a relative youngin, with no children, and found the book to contain some good ideas, and inspiration. I did not buy it though, I borrowed it from the library. I would not have went out and bought it new if it had not been in the library, but would have kept my eyes open for it at the used book store, thrift shops and rummage sales that I go to!

I would say don’t buy it. The lessons it teaches mostly have to be learned by experience. They are “the basics” really. Work hard, be responsible, don’t waste, invest wisely, ALWAYS save some, etc. I would suggest checking this book out at the public library! How wise you would be if you DID learn an important lesson from this book AND you didn’t spend ten buck buying it!

Books worth budgeting for

My new book, The Simple Dollar: How One Man Wiped Out His Debts and Achieved the Life of His Dreams, is available in bookstores now. Check out some of the life-changing experiences the book has given readers!

Check out my book, 365 Ways to Live Cheap, available in bookstores everywhere! It's filled with 365 great tactics you can apply to your personal finances, from frugal tips to great ideas for managing your money.